Loophole Or Workaround? (Food Stamp Edition)

In the debate over whether to cut the food stamp program, members of Congress are looking at two pretty arcane provisions in the law. People who want to cut food stamps call the provisions loopholes. People who don't want to cut food stamps say they're efficient ways to get benefits to those who need them most.

1. Categorical Eligibility

People who qualify for one means-tested program — like welfare — can automatically qualify for other programs — like food stamps. This is called "categorical eligibility."

Jessica Shahin, who oversees the food stamp program at the U.S. Department of Agriculture, says this saves states time and money, because they don't have to sign people up twice. "It simplifies the process for states," she says.

And besides, says Shahin, people still have to have a very low income — below the poverty line — to actually get the food stamps. (The food stamp program, by the way, is now formally called SNAP.)

But Republicans point out that categorical eligibility has allowed states to waive a $2,000 asset limit for food stamps recipients. So someone could have, say, $20,000 in the bank and still get food stamps. They argue that this allows people who don't need benefits to get them.

Deborah Carroll, who administers food stamps for 130,000 residents in the District of Columbia, say that's very rare — and it would be prohibitively expensive to verify recipients' assets.

"If we had to do that for everyone, it would cost us two, three, four million dollars more to administer that program for a fraction of the population that may have assets out there that we don't necessarily know about," she says.

2. Heat And Eat

Low income families who get help paying their utility bills through the federal Low-Income Home Energy Assistance Program (LIHEAP) can automatically qualify for higher food stamp benefits. States have figured out if they give someone just $1 in LIHEAP payments, that person can receive more food stamps — paid for with federal dollars.

"It may be a loophole, but I think it's one that benefits families," says Carroll.

Lawmakers in both parties want to make this harder for states to do. They say it will save billions of dollars in federal funds.

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Transcript

DAVID GREENE, HOST:

Let's continue our conversation about a farm bill that Democrats and Republicans are trying to negotiate today in Washington. The differences over the bill are huge. The House wants to cut food stamps, or SNAP benefits, by $40 billion over 10 years. The Senate wants to cut 4 billion. Pam Fessler from NPR's Planet Money team explains that the cuts involve complicated legal maneuvers - some call them loopholes.

PAM FESSLER, BYLINE: To hear Republican Andy Harris of Maryland on the House floor this year, $40 billion in cuts wouldn't be all that bad.

REPRESENTATIVE ANDY HARRIS: This is a common sense reform that cuts waste, fraud and abuse, leaving more money for the Americans who truly need help in time of need.

FESSLER: Well, not exactly. The nonpartisan Congressional Budget Office says almost two million low-income people would lose their benefits under the House bill. And waste, fraud and abuse? The cuts really deal with something much more arcane. Here's Republican Rick Crawford of Arkansas.

REPRESENTATIVE RICK CRAWFORD: This legislation will no longer allow states to exploit various loopholes, such as artificially making people eligible simply by mailing a TANF brochure, or substantially increasing benefits by sending a nominal LIHEAP check.

FESSLER: OK, that's a mouthful. But let me try to explain. First, yes, you can - as Crawford says - become eligible for food stamps if you receive a brochure from the welfare office. As outrageous as that might sound.

JESSICA SHAHIN: It does sound a little outrageous. I won't disagree with you on that, but I think what you have to do is think about what it really means.

FESSLER: Jessica Shahin oversees food stamps at the U.S. Department of Agriculture. She says you still have to be relatively low income to get the brochure. That it's really an administrative shortcut. The law allows someone who's eligible for benefits for one means-tested program — like TANF or welfare - to automatically become eligible for another, like SNAP. That way you don't have to apply twice.

SHAHIN: It simplifies the process for states.

FESSLER: But, she says, there's a caveat. An individual's income still has to be very low - below the poverty line - to qualify for food stamps benefits.

SHAHIN: If the person has an income that makes them ineligible for a benefit, you can be eligible all day long; you're not getting a benefit.

FESSLER: In other words, if you get that brochure, you're really just eligible to be considered for benefits. Still, Republicans complain that the maneuver has allowed states to waive a $2,000 asset limit for food stamps recipients. So you can have, say, $20,000 in the bank and still get the aid. But states say that's rare and it costs a lot to figure out what people do or don't own. Deborah Carroll administers food stamps for 130,000 residents in the District of Columbia.

DEBORAH CARROLL: If we had to do that for everyone, it would cost us 2, 3, $4 million dollars more to administer that program for a fraction of the population that may have assets out there that we don't necessarily know about.

FESSLER: So the debate really comes down to a difference in philosophy between those trying to get benefits to the needy as quickly as possible, and those trying to reign in government spending. And that brings us back to Congressman Crawford's other complaint. Here it is again.

FESSLER: LIHEAP. That's a program that helps low-income people pay their energy bills. Those in the program can automatically qualify for higher SNAP benefits. So states have figured out if they give people just $1 in LIHEAP aid, they can get more food stamps - paid for with federal dollars. Both the House and Senate want to clamp down on that one.

DEBORAH CARROLL: Yeah, well it may be a loophole, but I think one that benefits families.

FESSLER: Again, D.C. administrator Carroll. The way she see it, this is one way to offset other cuts in the food stamp program at a time of need, that one person's loophole is another's workaround. Pam Fessler, NPR News. Transcript provided by NPR, Copyright NPR.